Deliveroo sales soar 600% as global expansion heats up

However, investment costs meant food delivery firm failed to make a profit in 2016

A Deliveroo rider in central London. The company has been criticised for perpetuating the “gig economy”. Photograph: Nick Ansell/PA

A Deliveroo rider in central London. The company has been criticised for perpetuating the “gig economy”. Photograph: Nick Ansell/PA

 

Deliveroo’s global expansion has sparked a 611 per cent increase in annual sales, but the start-up food delivery firm failed to turn a profit as investment costs weighed on its bottom line.

The company said sales surged to £128.6 million in 2016, marking a significant increase from £18 million just a year earlier, with “revenues from the international regions increasing substantially” for the period.

The food delivery company, which has its headquarters in the UK, now operates in 13 countries, including Ireland, the US, Italy, Dubai, Australia and Hong Kong. But according to the latest accounts filed for Roofoods Ltd at Companies House, its pretax losses ballooned 328 per cent from £30.1 million in 2015 to £129 million last year.

Rising operating costs were compounded by its rebranding project, which involved design costs and the write-off of old branded equipment, totalling £5.3 million.

Deliveroo signalled brighter times ahead, saying that it expects “significant further growth” in sales across all markets, and would generate that growth by improving its online presence, expanding its distribution networks and launching a “large scale, high impact” marketing campaign.

A spokesman for the company said: “Deliveroo is going from strength to strength, with revenue jumping by over 600 per cent across our global markets in 2016. Deliveroo is investing heavily in new technology and new sites across the world.”

Local laws

The company said in its report that it had been hiring skilled software and hardware engineers as part of that investment. “We are extremely proud that in only four years Deliveroo now works with over 30,000 riders and 20,000 restaurants to deliver great-tasting food in over 140 cities around the world.”

However, the accounts said increased competition in the delivery space posed a risk to the business, which comes amid the growing popularity of rival services such as UberEats.

It also flagged the effect that local laws could have on its operations. “Changes to regulation or legislation could impact the group – the group closely monitors all relevant regulation and legislation to ensure that potentially adverse changes are identified early in the process and action is taken to mitigate any impact.”

Companies such as Deliveroo and Uber have come under fire in recent years for their participation in the so-called gig economy, which dubs workers self-employed and pays according to the number of deliveries or trips they complete.

Those companies have been urged to do better on workers’ rights. A recent UK government report into the gig economy recommended that workers for the likes of Deliveroo and Uber should be given a new employment classification as “dependent contractors” to reduce risk for employees working flexible hours.

Press Association